Financial Crime World

Jamaica’s Banking Sector Seeks to Rebuild Trust Amid Soaring Fraud Cases

The Bank of Jamaica (BOJ) has released its Financial Stability Report 2022, revealing a stark contrast between the value and number of bank fraud cases in the country. While the total value of bank fraud dipped to around $700 million in 2022, the lowest in five years, the number of attacks or occurrences of fraud jumped by two-thirds from 15,000 to over 25,000 - the highest level seen in at least five years.

Credit Card Fraud Dominates, but Internet Banking Fraud on the Rise

Credit card fraud continues to be a significant concern, but internet banking fraud has gained ground. Fraudsters have found ways to bypass two-factor authentication using SIM-swap fraud, which involves using fraudulent SIM cards to receive phone calls or text messages to gain access to someone else’s online banking account.

Demographics of Bank Fraud Victims

The report notes that women are the victims of bank fraud at slightly higher rates than men, with 51.6% of victims being female. Additionally, persons in the prime working age, between 35 and 50, are the key victims. The BOJ attributes the decline in losses to the introduction of chip encryption in cards.

Trend Analysis

Despite the dollar value dipping, the number of occurrences of documented fraud has skyrocketed since the onset of the pandemic in 2020. In 2019, less than 5,000 fraud instances occurred, then over 15,000 in 2020. It dipped slightly in 2021 and then rocketed to over 25,000 in 2022.

Definition of Bank Fraud

The BOJ defines bank fraud as the use of unlawful means to obtain funds or other property owned by a financial institution or a depositor of a financial institution. Bank fraud can also be viewed as a predicate offence for money laundering.

Types of Fraud

The report listed six specific types of fraud, including:

  • Fraudulent cheques
  • Credit and debit card fraud
  • Wire transfers
  • Loans
  • Internet fraud
  • Internal or occupational fraud

The rise in fraud isn’t unique to Jamaica’s banking sector. International bodies are reporting a rise in fraud globally since the pandemic. The BOJ has warned of further inflationary pressures, associated increases in interest rates, and weakening global growth as principal risks to the financial system in 2023.

Conclusion

In conclusion, while the value of bank fraud may have dipped, the number of occurrences has skyrocketed, making it crucial for the banking sector to rebuild trust with customers. The BOJ’s report highlights the need for continued vigilance and collaboration between banks, regulators, and law enforcement agencies to combat this growing threat.